All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

Having examined the delegation system used by the Development and Employment Fund, it was found out that it violates  the provisions of Sharia through deputizing the client to purchase the requirements of the project on its behalf. This isn`t permissible because it is similar to riba or interest. Resolution No. (1760)(8/2012) of the Iftaa` Board states: "It isn`t permissible to deputize the client or his deputy to purchase and receive commodities on behalf of the establishment/bank conducting Murabaha to prohibit borrowing through riba or interest. Since the outcome of this delegation is similar to usurious loans, this transaction becomes cash for cash with interest. This is particularly true when this delegation becomes the common practice of the  establishments/banks conducting Murabaha, and this would lead to losing the true essence of trade, which sets apart Islamic banks from usurious banks."

Therefore, the deputy must be appointed by the Fund itself without any interference from the client.

Moreover, it is worth reminding that it is conditioned that the deputy purchases and receives the commodities before the client signs the funding contract. Also, it isn`t permissible for the deputy to hand that amount to the client in order to avoid falling into usury. And Allah the Almighty knows best.

*Fatwa No. (3158) about the Murabah contract of the Development and Employment Fund was issued on 11/1/2016.